January 11, 2022Why You Should Try the 50/30/20 Budget

Creating a budget can often seem so complex. The more complicated it seems, the less likely you may be to make the effort. But you need some type of budget to help keep your spending in check and to ensure progress toward your short- and long-term financial goals. 

If you’re new at creating a budget — or have been putting it off for fear of messing it up because you don’t fully understand what it is you’re supposed to do — consider the simplified 50/30/20 budget instead.  

Why Is the 50/30/20 Budget So Popular? 

Shakespeare once said, “Brevity is the soul of wit.” It rings true today — especially when it comes to creating a budget.  

The 50/30/20 budget is just that. Brief. It isn’t complicated. You don’t have to do a lot of math to figure out what money goes where. It is simplicity at its best.  

How Does the 50/30/20 Budget Work?  

For any budget to be effective, you must first understand how it works so you can implement it within the current frameworks of your finances, lifestyle, and family needs. Here’s how it works—take your after-tax income and break it into three categories: 

  • 50% of your income goes to living expenses (NEEDS). This includes things like your housing, transportation, groceries, utilities, etc. 
  • 30% of your income goes to personal expenses (WANTS). This includes things like entertainment, subscription services, coffee runs, dining out, etc. 
  • 20% of your income goes to saving and/or paying down debt (SAVINGS). This can include things like building your emergency fund or paying extra on debts like credit card balances or student loans. 

Seems easy, right? Actually, it is. At least, it can be. The biggest challenges you might have in trying to make the budget work for you are first, adjusting to new financial realities; and second, choosing which items to eliminate from your monthly spending to make the 50/30/20 budget work for you. 

We’re Here to Help!

We understand the challenges of creating new accounts for saving and automating the process of moving funds from one account to the next. We’ll help you automate the process as much as possible so the money seems to magically arrive in your saving account month after month after month. 

Stop by any branch location or give us a call at 1-800-226-6673 to get started today.  


Each individual’s financial situation is unique, and readers are encouraged to contact PEFCU when seeking financial advice on the products and services discussed. This article is for educational purposes only; It does not constitute legal advice. If such advice or a legal opinion is required, please consult with competent local counsel.  



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